FOMO is continuing to play a major role in pushing up global house prices at their fastest rate in more than a decade, as Canberra, Hobart and Darwin record double digit growth.
According to Knight Frank’s Global Residential Cities Index, which tracks 150 international cities, the average annual price growth is at 7.4%, the fastest rate recorded since 2007.
While 22 cities recorded saw house prices fall for the year, 43 saw an annual price growth above 10%.
Three Turkish cities made the top 10 of the index, with Izmir taking the top spot, with 33.9% growth, followed by Ankara at number two, with 30.3% and Istanbul at number four, with 30.1%.
New Zealand’s Wellington ranked at number 3, seeing a monthly change of 30.1%, followed by Seoul, ranked 5 at 26.1%, Halifax at 22.5%, Moscow at 22.4%, St. Petersburg at 22.1%, Hamilton at 20.9% and Phoenix closing out the top ten at 20%
“The three Australian cities of Canberra, Hobart and Darwin all recorded double-digit price growth over the past year and ranked in the top 41 of 150 cities around the world,” said Michelle Ciesielski, head of residential research Australia at Knight Frank.
Canberra saw the greatest growth in Australia, ranking at number 17, after a yearly change of 15.7%, followed by Hobart at number 23, with 13.8% and Darwin at 10.8%.
“Australia’s five least populated capital cities led the residential price growth over the past year, and all trended above the elevated average annual price growth across the 150 global cities,” added Ciesielski.
Adelaide just missed out on double digits, though still made the top 50, ranked 44 with a 9.8% year-on-year growth.
While Perth ranked 51, at 8.9%, Sydney ranked 55 at 8.6%, Melbourne ranked 70 at 6.4% and Brisbane ranked at number 89, with 5.0% growth.
“The increase in sales transactions demonstrates the commitment in the migration of people moving towards these smaller cities and regional areas, and many first home buyers have been in a better position to buy given the relative value compared to where they were previously living,” said Ciesielski.
“Those relocating but not purchasing a home in these five smaller cities, has resulted in the rental vacancy falling from an average of 2.4% at the start of the pandemic, to now average a very low 1.2%,” added Ciesielski.
This was reflected in Domain’s Rent Report for the June Quarter, which saw significant increases to year-on-year rents across much of the country’s capital cities and low supply leading to an increasingly competitive market.
“In these markets, we estimate the balance between supply and demand to be around 3%, so there is already a significant shortage of stock with very little planned to be built in these cities in the coming years,” said Ciesielski.
FOMO or fear of missing out is a major factor cited in the report, pushing up prices at least in the short to medium term.
This is partially manifested in investors taking advantage of local rising prices as borders remain closed, as well as buyers looking to take advantage of the current economic environment by snapping up property while rates remain low.
In some markets it is manifesting as savings having been built up throughout the last year, leafing households to begin looking at a second home.
The report does however believe that these fast paced rises could be beginning to slow down, as in many markets the impacts of COVID-19 begin to wane.